Practical Law Voting Agreement

With respect to the balance claim, the Tribunal first considered the applicants` assertion that the merger was subject to all audit fairness standards. The complainants argued that the company`s board of directors “should be considered a monolith and that, given the voting rights and control of the board of directors, the merger should be analyzed as if it were a squeeze-out merger proposed by a controlling shareholder.” [8] In Kahn v. Lynch Communications Systems, Inc.[9], the Delaware Supreme Court found that, in certain particular circumstances, the standard of fairness of verification applied from the initio. For example, a private transaction negotiated with a controlling shareholder or a merger of two companies under the joint control of a controlling shareholder. In the circumstances in which a controlling shareholder is on either side of a negotiated transaction, the Delaware Supreme Court held that the approval of the transaction by disinterested directors (e.g. B by a special committee) or by the majority of disinterested shareholders would only shift the burden of proof of total fairness, but would not be invoked for the material protection of trade rules. When considering the applicants` argument that concentration is the Kahn/rule. Lynch found that officers and directors were not a “controlling group of shareholders.” [10] The Court found that under Delaware law, there is a controlling shareholder, either where the shareholder (i) holds more than 50% of the voting rights of the company, or (ii) has control over the operations and affairs of the company. [11] In total, officers and directors held only 33.5% of the company`s voting rights. Moreover, the evidence did not show that the officers, directors and their respective families were acting as a single control block. [12] On the contrary, Vice-Chancellor Leo Strine Jr. found that none of the members of the allegedly controlling bloc (composed of directors, officers, spouses, children and parents) had a vote and that each “had the right and incentive to act as a shareholder in his own interest.” [13] It is important that out of about 20 people who make up the “so-called controlling group of shareholders”, the largest block of an owner was 10.6%. [14] Thus, the Court explained that PNB Holding`s decision confirms that the physical protection of the corporate judgment rule can be invoked outside the Kahn/V.

lynching context, if a transaction is approved by independent and disinterested directors (e.g. B, a special committee that operates in its own right) or by a majority of fully informed and unforced minority shareholders.